A Profitable About-face Zayre Increases Number Of Stores While Working On Image

August 19, 1985|By Selwyn Crawford of The Sentinel Staff

Back in the middle and late 1970s, top-level officials of Zayre Corp., were wondering what they could do to rejuvenate what they admit was a stagnant company. Although overall sales were increasing, the company was barely breaking even.

For example, corporate net sales for fiscal year 1974 were $1.045 billion, while profit was $832,000. Ten years later, in fiscal year 1984, company net sales were $3.12 billion, but company profit had jumped to $80.3 million.

The pickup came in the form of former American Express Co. senior vice president Maurice Segall, who joined Zayre Corp. in 1978 as president and chief executive officer.

He challenged his management team to become more innovative, and immediately launched a $65 million program to increase the number of stores, improve Zayre stores' physical appearance and its sagging image. That new program now has reached Central Florida.

Two stores -- the Zayre on West Colonial Drive in Orlando and the Kissimmee store -- already have been remodeled and a new one opened Aug. 11. No other new stores are planned for Central Florida, but the nine other existing area stores will be revamped later.

One of Segall's biggest supporters is Malcolm L. Sherman, president of Zayre stores and executive vice president of Zayre Corp. Sherman agreed that Segall has been the driving force behind the company's turnaround, but, he said, Segall hasn't done it alone.

''There is no question that when Maurice Segall joined the company he brought a decisiveness to the company that it needed,'' Sherman said during a recent telephone interview from his Framingham, Mass., office.

''But let's not forget that the men who are running the Zayre division now are the same men who were running it in the early and middle 1970s,'' Sherman said. ''Those men, along with Morris, have helped turn this company around.'' The about-face for Zayre Corp. -- which also owns 168 T.J. Maxx off-price apparel stores, 416 Hit or Miss stores for young women and five BJ's Wholesale Clubs -- has been twofold. First, the remodeling of the stores has included changes ranging from a new color scheme to a new store layout.

Also, the company's financial status has taken a big step up. Since Segall came on board, Zayre Corp. has had a 37 percent annual compound growth rate in profit. Sales during the past fiscal year, which ended Jan. 26, were a record $2.1 billion. An aggressive expansion plan calling for 25 new stores a year will have 335 Zayre stores nationwide by the end of this year -- up from 260 in 1979.

As part of that program, Zayre Corp. earlier this year bought 28 Gaylords discount department stores from New Jersey-based Gaylords National Corp. Sherman said that deal gave the company an immediate opportunity that otherwise may not have presented itself for years.

''Gaylords was an excellent acquisition for us because most of the stores were in markets that we weren't in and it gave us the opportunity to get into new markets,'' Sherman said. ''We were able to get into New Orleans with 10 stores in one shot. It gave us the opportunity to get under one advertising umbrella. It could be that we would make another acquisition . . . We're always looking,'' Sherman said.

It's that kind of outlook that has made Zayre one of the most impressive retailers in the country, according to industry analysts. Monroe Greenstein, a retail analyst with Bear, Stearns & Co. in New York City, is one industry expert who likes what he has seen of Zayre's changes.

''They've been very successful since they modernized the stores,'' Greenstein said. ''They've improved them and improved the merchandise. They're also merchandising into areas most people have forgotten about. That's the middle- and lower-income, and ethnic market.''

Zayre's push into urban neighborhoods is one that Sherman said will continue. He said business in the downtown areas of major cities has proved very beneficial to Zayre and as other retailers move away, Sherman said Zayre plans to fill the void.

Sherman said Zayre ''has always had a major position in urban areas'' because it ''knows how to do business'' in those locations. He said the company also has learned how to operate successfully in more upscale markets as well.

That is true in Florida, a state that Zayre is putting a lot of emphasis on, Sherman said. Zayre had 64 stores in Florida at the beginning of 1985, more than in any other state, and Sherman said there could be as many as 90 stores by the end of the year.

Central Florida is especially fertile ground for Zayre because of the area's market diversity, Sherman said. That allows the company to keep changing to satisfy its potential customer base -- and satisfy company officials as well, he said.